Inconclusive vote in Italy brings new financial instability

Tuesday

Feb 26, 2013 at 9:03 PM

THE NEW YORK TIMES

In recent years, recession and financial turmoil have felled governments throughout Europe as voters looked for change in an era of economic distress. Now, in a worrying reversal, political dysfunction appears to be capable of snuffing out the sparks of economic revival on the Continent.

After its voters this week denied any party enough backing to form a credible government, Italy joined Greece in preventing establishment parties from achieving the mandate they would need to push through painful reforms, inviting new financial instability.

That dynamic is quite familiar to Americans, who have watched President Barack Obama and the Republican-controlled House of Representatives lock horns over the debt ceiling, the so-called fiscal cliff and now sequestration in what many experts consider to be the biggest threat facing the economy.

Increasingly, experts on both sides of the Atlantic have begun to ask whether politicians in some advanced nations, faced with high debts, aging populations and slower growth, are capable of promoting plans that offer a way out of the malaise — or whether they could get elected if they did.

“The governing parties tilt ever more toward populism instead of making decisions that are important but unpopular,” said Eckhard Jesse, a professor of political systems and institutions at the Chemnitz University of Technology in Germany.

In Italy, the surprise success of the Five-Star Movement, founded by the comedian Beppe Grillo, has dashed hopes that the recent calm in financial markets was anything but a brief pause.

The uncertain outcome of the election in Italy is only the latest illustration of how a sclerotic system has become increasingly fragmented, leaving fragile multiparty coalitions incapable of bold gestures and holding the reins of power only tentatively.

The question remains whether the phenomenon is a natural outgrowth of the financial crisis and its aftermath or representative of a permanent shift, driven by demographic changes that have forced difficult policy choices, new technologies that have put the quick formation of mass movements within reach and an electorate with no patience for missteps or difficult reforms.

On Tuesday, Pier Luigi Bersani, leader of Italy's left-wing Democratic Party, called on the Five Star Movement to work with others to govern the country, rather than just calling for the existing politicians to go home. “Until now, they've been saying: `Everyone go home.' But now they're here, too,” he said. “So either they should go home as well, or say what they want to do for their country and their children.”

The Democratic Party managed a relatively strong showing, finishing first in the lower house, but it did not win enough seats for a majority in the senate. The country's caretaker prime minister, Mario Monti, had been praised across Europe for his steady hand and willingness to try to reform the economy. Voters disagreed, giving his fledging civic movement about 10 percent of the vote, only enough for a fourth-place finish.

Blindsided by the success of the Five Star Movement, Italy's leading political parties struggled Tuesday to find a governable majority. While the Democratic Party won in the lower house, it was the center-right party of former Prime Minister Silvio Berlusconi that came back from the grave to take control there. So far, Grillo has shown no signs of moderating his position about forming alliances with the mainstream parties his people were elected to repudiate.

Gripped by economic and social malaise, voters are in a repudiating sort of mood. More and more people are casting their ballots against mainstream parties, choosing protest votes even when they know the fringe groups are unlikely to govern better, said Peter Filzmaier, a professor for democracy studies and political research at the Danube University Krems, in Austria.

“We are experiencing a phase where it is enough for a party to be different for it to win votes,” Filzmaier said. “It could be the Pippi Longstocking party. It makes no difference.”

When they are not expressing their outrage at the ballot box, people are taking to the streets. In Bulgaria last week the prime minister resigned in the face of nationwide protests.

Nor is the phenomenon restricted to Europe. In Israel, Benjamin Netanyahu has struggled for weeks to set up a coalition in a newly elected parliament where 48 out of 120 lawmakers are joining the body for the first time and where the defiant Yesh Atid Party won 19 seats.

Traditional politicians, representing entrenched interests, are ill-equipped to address the root of the problems, making the people even more contemptuous. And the upstart parties appear to have no solutions either, aside from turning over an old system that has fed distrust of the political class.

“There's a sense that the old politics in whatever form and whatever country have reached the limits of their ability to cope with a world that seems to be spiraling out of control,” said Yossi Klein Halevi, a senior fellow at the Shalom Hartman Institute in Jerusalem, a research institute.

In Greece, where austerity measures imposed by foreign lenders have helped collapse the real economy, the leftist Syriza party nearly won national elections last May, prompting a second round in which European leaders sent a strong message: If Syriza were elected, Greece would be kicked out of the euro.

Neither scenario came to pass. Today, Europe has more mechanisms to protect the single currency, and Syriza — with its charismatic young leader, Alexis Tsipras — is almost neck-and-neck with the governing center-right New Democracy party in polls. The party has a strong anti-austerity line and has criticized the established parties as tainted by cronyism and corruption. In part it is the duration and depth of the problems that have made them so difficult to stomach. The farther away solutions seem, the farther afield voters look for solutions.

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